Tag: 1031

After owning a home in San Diego for over a decade, Trink and Steve, who had moved to Portland several years back, decided it was time to get more invested in the Portland market. When they originally moved from San Diego, they decided to rent out their home for several years, managing it from Portland.

This year it was time to finally make a move and sell that house. With the need to remodel their current Portland home, they would sell the San Diego property, use some of the money for their home remodel, and the rest for a few rental properties in Portland. And they could do this through a mostly tax-exempt 1031 exchange. This would allow them to realize most of the profit from the San Diego house without having to pay tax on it since most of it was being shifted to other rental properties very quickly thereafter.

What I like about this, is after investing so much into their original San Diego property, they were able to have it work for them. They sold that house for just under $1 million, bought 3 properties in Portland that cash-flowed for about $1.3 million, and pulled about $100,000 out of the San Diego home profit to do renovation work on their own house. I know, I know. In what math class do those numbers add up? They add up because Trink and Steve got a mortgage for those 3 investment properties here in Portland, which gave them more buying power. Even with these mortgages, we were able to find properties that cash flowed. And the money they flipped into those properties, they were exempt from paying tax on because of the 1031 exchange.

They now have 3 great investment properties here in Portland, and have the money to do some much needed renovation work to their own home.  Here is one of the three properties they bought. This one, a duplex in NE Portland.

 

1031’s can feel complex. I have a great team consisting of a 1031 attorney, 1031 mortgage broker, and escrow officer who have helped clients do this sort of thing for a long time. If you liked how that math equation worked out, or have any questions about how you can better leverage an investment property, I can help you with that.